After the collapse of the Soviet Union, the former Soviet republics tried to search for their place in the new global structure. It was necessary to discover new neighbours who had been separated for many decades by the “Iron Curtain.” Hence, since regaining independence, Azerbaijan’s relations with nearly all regional states have undergone a tumultuous period. Although the diplomatic relations of Azerbaijan with other regional actors gradually stabilized, the dialogue with Shi’a Iran remained uneasy.
For Azerbaijan, the Islamic Republic of Iran is not just an ordinary country. First, Iran is one of the biggest neighbours in the south, with about 618 kilometres of land borders. Tehran’s long-standing destructive hybrid warfare strategy toward its immediate neighbourhood and beyond for many years has had a negative impact on relations with Baku and irritated the latter.
Nevertheless, Baku and Tehran established a pragmatic partnership entailing various regional infrastructure projects, particularly transit links. However, 2020-2023 marked the most heightened tensions in Iran-Azerbaijan relations, with deadly consequences for both sides.
Azerbaijan’s Threat balancing
Azerbaijani-Iranian relations have been strained since Azerbaijan’s victory in the 2020 war with Armenia, with both sides accusing each other of engaging in terrorism and espionage. The deteriorating relations between Iran and Azerbaijan garner significant attention, raising concerns about the potential impact on the South Caucasus region. The possible consequences of escalating tensions include economic disruptions and border clashes with the involvement of regional and non-regional actors like Turkey, Russia, Israel and possibly the West.
From the Iranian point of view, several important catalysts led to the deterioration of relations with Azerbaijan, such as the claims of Baku harbouring Israeli intelligence on its soil and the strengthening of the Baku-Ankara axis at its doorstep. As such, in an attempt by Tehran to flex its muscles and intimidate Azerbaijan, the Islamic Revolutionary Guard Corps conducted large-scale military drills on the border with Azerbaijan in October 2022. Unlike previous years, the exercises provoked an uneasy reaction within Azerbaijan and triggered anti-Iranian sentiments throughout the country. During the military drills in October, codenamed Mighty Iran, Iranian forces practised setting up pontoon bridges and crossing the Aras River, part of which forms a section of the border between the two countries. It marked the first time that Iranian forces had conducted such exercises. Moreover, the tensions reached a critical level when the Azerbaijani embassy in Tehran came under attack by an armed man, leaving one dead and others injured. As a result, Azerbaijan put diplomatic relations on halt and shut down its embassy, and shortly after, expelled several Iranian diplomats from the country, citing their “undiplomatic activities” in the country.
Although Iran’s MFA denied that it bore responsibility for these incidents, Azerbaijan demonstrated that it would no longer buy Iran’s excuses and took action both rhetorically through official statements and with arrests. While Iran deemed the attack merely an individual acting on a personal vendetta, Azerbaijan’s President Ilham Aliyev rejected Iran’s explanation and called it a “terrorist attack.” With denials of involvement in all of these provocations from the Iranian government being flimsy at best, Azerbaijan has demonstrated that it will no longer give Iran the benefit of the doubt, and with this, has ushered in a new chapter of open tension between the two countries.
Notably, Iran’s main criticism of Azerbaijan can be attributed to its concerns regarding the potential border shifts in the South Caucasus, thus diminishing Iran’s already weakened soft power influence. In addition, Iranian aggression toward Azerbaijan is undoubtedly a symptom of a reshuffling of alliances in the region and a shifting of global dynamics, resulting in new partnership blocs.
Despite Tehran’s claims that it maintains the leading regional power, its influence over Azerbaijan and the region gradually declined even before the 2020 events. Moreover, Iran appeared to be comfortable with the long-term status quo on Azerbaijani borders and uncontrolled territories in Karabakh for three decades, as it actively used the war-torn region as a major corridor for drug trafficking, oil smuggling and other sanctions-busting activities that helped alleviate economic pressure on the Islamic Republic. It was also apparently used to send Russian weapons to Armenia via Iran.
Tehran is cautious that in the post-war period, the Azerbaijan-Turkey-Israel trio will do everything to fence off Iran from the region, thus establishing new red lines. As Baku and Ankara fill the void in the South Caucasus that Russia is leaving behind, Iran is left with Armenia as its key regional partner. For instance, in October 2022, Israel’s then-defence minister, Benny Gantz, visited Azerbaijan, and the two countries signed several military and security agreements, which angered Iran and caused a flood of criticism toward Baku in the Iranian state-run media.
The situation further ignited when Israel’s foreign minister, Eli Cohen, ahead of a trip to Turkmenistan, visited Azerbaijan in April 2023 to open Israel’s first embassy in the country, located just 20 km from the Iranian border. Cohen’s remarks regarding the “close partnership between Tel Aviv and Baku against Iran” inevitably triggered harsh rhetoric in Tehran. However, this time, official Baku largely ignored all threats from Iran. Baku’s attempt to reinvigorate regional alliances with the Turkic world in Central Asia and establish new transit routes bypassing Iran reinforced the latter’s preexistence fears about the potential irredentist minority groups. While Iran has many minorities, of greatest importance to regime stability are Azeris, Turkmens and Kurds. The ethnic Kurds are in a latent rebellion against the regime, while the Azeris and Turkmens have remained relatively pacified.
On the other hand, the potential shifting borders in the South Caucasus would come with a cost for Iran, as it may lose its leverage over Azerbaijan as the only land route linking it with Turkey. In the post-war period, Azerbaijan proposed establishing a land corridor with Nakhchivan via Armenia’s Syunik province, thus circumventing Iran. Undoubtedly, such perspectives angered isolated and politically unstable Iran.
Consequently, Iran gained very little from the deliberate escalation of diplomatic relations with Azerbaijan, as the latter is an important trade partner of Tehran and a key country in terms of connectivity and infrastructure projects, particularly within the North-South Transit Route.
Iran – Azerbaijan partnership: Trade amid war of words
The diplomatic standoff between Tehran and Baku came in light of the unprecedented violent riots against the Islamic regime after the security forces tortured and killed Mahsa Amini, an Iranian Kurd. The violent uprising reached nearly all Iranian provinces and still has not fully died down. Iran’s population comprises many ethnic minorities, and these protests have demonstrated the discontentment of many of these communities.
The political and economic instability ignited dramatically when conservative president Ebrahim Raisi assumed office in 2020. The absence of a pragmatic visionary and long-term strategy of Raisi’s hardliner government led to the deterioration of political relations with the immediate neighbourhood, including Azerbaijan. However, despite diplomatic escalation with the neighbourhood, Iran increased trade volumes with several countries in the region, highlighting the long-established IR system control that economic and political ties are developing separately. Thus, despite existing turmoil with Saudi Arabia and the UAE, in the 2022-2023 fiscal year, Iran traded 58.25 million tons of goods worth $35.11 billion with the Persian Gulf’s six littoral states, namely Iraq, Kuwait, Qatar, the UAE, Bahrain and Saudi Arabia, registering a 10.05% rise in value compared with the previous year’s corresponding period.
As in the case of Azerbaijan, Baku has long been standing as Tehran’s leading trade partner amid its struggle with harsh inflation and mounting unemployment rates. According to the Azerbaijani media, the trade turnover between Azerbaijan and Iran in January-May 2023 amounted to $212,612,000, up 7.6 per cent from the same period in 2022. During the reported period, the exports from Azerbaijan to Iran made up $7,558,000, and from Iran to Azerbaijan – $205,053,000, respectively.
Consequently, trade is not the only determinant factor in Azerbaijan-Iran relations, as both countries were intensively engaged in several regional infrastructure projects, particularly railway links and new highways at the border areas. In this vein, Azerbaijan played a crucial role in linking Iran to Russia within the INSTC framework. In May 2023, Russia and Iran agreed to complete a railroad that would link Russia with ports on the Persian Gulf, providing a transportation lifeline – via Azerbaijan as a critical link – for the two sanctions-hit countries. Due to insufficient funds, Russia is set to be the project’s main sponsor. However, in the wake of diplomatic tensions, the response from Azerbaijan has been quiet. The local governmental bodies preferred not to comment much on this deal, thus signalling that the INSTC-related projects are not a priority for Baku anymore, which instead touting its growing role on another key transit route – the Middle Corridor, shipping goods between Europe and Asia while bypassing Russia and Iran.
Indeed, the Republic of Azerbaijan is a vital part of the International North-South Transport Corridor (INSTC), Iran’s main route for transit and trade with the densely populated western regions of Russia, Georgia, and Belarus. The Astara border crossing is the main transit route between Iran, the Republic of Azerbaijan, and Russia; on average, a truck crosses the border at Astara every seven minutes. The Azerbaijan-Iran transit route has become even more important recently as a result of the Ukraine war, the extensive Western sanctions against Russia, and the preferential trade agreement between Iran and the Eurasian Economic Union that is being upgraded to a free trade agreement.
As this paper discussed, trade and communication occupied a central place in Iran – Azerbaijan partnership in recent years. Therefore, even at the beginning of diplomatic escalation in 2022, Baku and Tehran signed another important agreement that envisioned establishing a new transport and electricity supply link connecting mainland Azerbaijan to its exclave of Nakhchivan via Iran. According to the memorandum, the two countries planned to establish a new railway, highway, communication, and energy supply lines connecting Azerbaijan’s East Zangazur economic region and the Nakhchivan region through the territory of Iran. In addition, four bridges will be built over the Araz River, including two motorways and two railway lines on them.
Despite the significance of the agreement’s scope, the further deterioration of relations halted this agreement. Consequently, Tehran’s staunch anti-Azerbaijani rhetoric that became more vocal since 2021 caused costly delays and setbacks in terms of economic partnership and regional connectivity, while Baku established new interregional partnership formats to diversify its portfolio.
Hence, Iran decided to take a step back and return to the diplomacy track as a part of the broader strategy of reconciliation with the immediate neighbourhood. Thus, Iranian Foreign Minister Hossein Amir-Abdollahian arrived in Baku on July 5, 2023, to attend the high-level meeting of the Non-Align Movement (NAM), where he managed to hold a vis-à-vis meeting with President Ilham Aliyev at the sidelines of the event. While the meeting was concluded with positive remarks, it became a good start for Baku and Tehran to rekindle the bilateral relations after months of confrontation.
Shortly after Abdollahian visited Baku, the Deputy of the Prime Minister of Azerbaijan, Shahin Mustafayev and Minister of Roads and Urban Development of Iran, Mehrdad Bazrpash, reached a new agreement to complete the construction of a road bridge across the Astarachay River and put into operation within the next four months. The foundation of a new bridge across the Astarachay River was laid on the border of Azerbaijan and Iran on January 25, 2022.
Moreover, on September 14, 2023, Prosecutor general of Iran paid an official visit to Baku and his Azerbaijani counterpart Kamran Aliyev to discuss the investigation into the armed attack on the Azerbaijani embassy in Tehran. The visit of a high ranking Iranian governmental official was also a positive signal in terms diplomatic thaw.
In this spite, the aide of President of Azerbaijan Hikmat Hajiyev acknowledged that Baku is receiving positive signals from Tehran, thus confirming the news of the ongoing diplomatic normalization.
Domestic turmoil in Iran, mounting international pressure and isolation, and the shifting geopolitical landscape in the South Caucasus have added further complexity to the tense relationship between Azerbaijan and Iran in the last three years. Although minor de-escalation recently occurred in Baku-Tehran relations, a smooth intraregional partnership based on mutual trust is yet to be achieved. As such, factors like economic and trade partnerships could be game-changer factors for re-establishing regional dialogue and restoring the pragmatic partnership.
However, if not successful, Iran’s bellicose rhetoric against Azerbaijan could force the latter to take additional strict measures in order to protect its borders and regional stability, which in turn could prompt a military response from Iran with the aim of securing its borderline with Armenia, as this is the only crucial leverage of Tehran over Baku.